Tuesday, April 26, 2016

How 'bout them bots!

The S&P 500 market bots have apparently come through once again.  On October 26 last year they switched to a bullish stance with 100% confidence based on an unusual seasonal factor, then last night - exactly 6 months later - they returned to their normal operating mode.  Although they remain in a bullish stance, the "internal price forces" are now neutral with a value of 5.3.  The S&P 500 index was at 2065 when the bots turned bullish in October, and this morning the index opened at 2091, so at the moment the six-month bullish call has eked out a 1% gain.

I've made good gains over the past six months, but it wasn't by following the bots' advice.  Regular readers know that I've been ignoring the bots this time, and instead have been bearishly invested against U.S. stocks with HDGE.  However I've had an equal investment in certain foreign stocks funds, and because these funds have gained more than the S&P over this period (i.e., they've gained more than HDGE has lost) I've made a net gain.

However the REALLY big gainer has been my 10% stake in the Gold Miner's ETF, which has absolutely skyrocketed in the past few months:

Ironically, the ability of my bots to time the U.S. stock market has been of little significance lately, and I suspect the bots will be even less significant over the next year or two as the dollar collapses and gold, silver, and foreign assets make large gains in dollar terms.

Tuesday, April 05, 2016

Dollar's fifth time on the brink

The U.S. Dollar Index is a weighted average of the exchange rate between the dollar and major currencies like the Euro and Yen.  The index started with a value of 100 in 1973 after the dollar was disconnected from gold, and it has since ranged from 165 (in 1985) to 71 (in 2008).  Lately it's been hovering in a range between 94 and 101, and today marks the fifth time in 11 months that it has reached a rising support line, shown in blue in the chart below:

It's only a matter of time before the Federal Reserve Bank lowers interest rates back to zero, or begins printing more money to prop up the stock market, or both, and the index will likely fall through the support line at that time.  It's also possible that foreign investors will anticipate those moves by the Fed before they happen, and if the index breaks below the support line before any Fed actions, it would both reveal that anticipation among fundamental investors, and trigger a bearish rush by currency traders.

This eventual breakdown is precisely why I'm in gold and silver, gold mining stocks, and stocks and bonds of foreign countries with healthier monetary policies.  Americans who are fully invested in U.S. stocks and bonds, or who keep lots of savings in dollars, are going to become much poorer.

Friday, April 01, 2016

Will the bots get a win here?

My automated S&P 500 market-timing bots turned bullish on October 26 last year, when the S&P 500 index was about 2065.  The market then fell 13% from December through February, and has since regained nearly all of the losses.  Yesterday the market closed at 2059, just six points below the bots' buy point.

I chose not to trust the bots at this time, and made a hedged bet of 30% bearish on the U.S. stock market [HDGE] and 30% bullish on some foreign funds that match the "Peter Schiff criteria." (Australia, New Zealand, Hong Kong, Singapore)  This combination has made a small gain over the past few months, which is good enough in these crazy central bank manipulated-markets.

The rare seasonal factor that has the bots pegged at 100% bullish is going to end very soon.  It will be interesting to see if this bullish position would have paid off after all, and what the market stance will be when the seasonal factor ends.